Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 14 October 1975
Page: 2040

Mr LYNCH (Flinders) -Australia faces a Budget deficit this year which threatens to bring on a renewed economic crisis and which is a further reflection of this Government's monopoly of disaster and deceit. The Budget presented to the Australian people this year is a dishonest and grossly misleading document. On 19

August the Treasurer (Mr Hayden) told this House that, immediately before the Budget, the Australian economy had faced a deficit nearly double that of 1974-75- in other words, a deficit of about $4 billion. The Treasurer said quite explicitly that such a deficit would be a prescription for accelerating inflation and, to use his words:

Its acceptance would have been tantamount to abandoning concern with inflation, discarding our wages policies, condemning the corporate sector to an attack upon its profitability and threatening the future jobs of thousands of Australians.

This is the circumstance which this country now faces. This Budget is no longer a credible document. The figures which it contains are phoney and inaccurate. There will be a short fall in receipts and a substantial degree of overexpenditure. These 2 factors combined will lead to a deficit in excess of $3.5 billion and, in all probability, to a figure approaching $4 billion.

This country at large can have no longer any confidence whatever in the ministry or in the Treasurer's capacity to hold the present Budget deficit figures. The Budget is nothing short of a prescription for economic disaster. But the Government has sought to suppress this fact as it has consistently sought to suppress many other aspects of its rather lurid, bizarre and scandalous financial transactions. The experience of last year is to be repeated. Last year the Government budgeted for a domestic surplus of $23m and yet, because of its financial mismanagement, turned its domestic surplus into a domestic deficit of $ 1,949m. The overall deficit ended up at $2,567m- $2 billion more than estimated in the Budget and $2.3 billion more than the previous year's Budget. The highest recorded deficit in Australia was $709m in 1972-73. Last year's deficit was almost four times the previous record. This year's deficit W111 be almost six times that level.

The trend in this year's deficit is already evident in statistical information.

The statement of Australian Government financial transactions, released by the Treasurer on 30 September, makes this point very clearly. In the first 3 months of this financial year government outlays have totalled 22.5 per cent of the Budget's full year estimates compared with 21.3 per cent in 1 974-75 and 2 1 .7 per cent in 1 973-74. Receipts, excluding company tax, were only 15.1 per cent of the full year total compared with 1 8.8 per cent in 1974-75 and 16.8 per cent in 1973-74. The net result is that the Budget deficit is running in excess of Budget estimates by an amount greater than $ 100m a month. These statistics are clear evidence of the trend. There is no point in the Federal Treasurer accusing the Opposition of multiplying statistics by four. I seek leave of the House to incorporate in Hansard a detailed table which I have had prepared on this question.

Mr SPEAKER -Is leave granted? There being no objection, leave is granted. (The document read as follows)-


Mr LYNCH - Already the deficit is being financed in a highly inflationary manner. There has been an extreme use of borrowings from the Reserve Bank- $848m alone in the month of September. I challenge the Treasurer during the course of debate to deny that this does not have serious inflationary consequences in the longer term. But the Treasurer has claimed that the increase in this year's deficit is to be welcomed if it arises from a shortfall in receipts. He has himself indicated that earnings will increase at a rate less than estimated. Regrettably the Treasurer is apparently incapable of separating the monetary consequences from the fiscal consequences and he is unprepared to inform the House as to the magnitude of the changes involved. If earnings increase at 1 7 per cent to 1 8 per cent- a rate consistent with the indications given to this House by the Treasurer- there will be a shortfall in receipts of around $400m to $450m. This of course will be a direct addition to the deficit.

The Treasurer has made it clear that the Government will not reduce outlays to compensate for the shortfall in receipts. This has been confirmed by the Leader of the Government in the Senate (Senator Wriedt) and I quote what the honourable senator said in answer to Opposition questions on the Loan Bill:

Apart from the Budget proposals themselves, there will be no new fiscal measures during 1975-76.

What that means, of course, is that this Government will continue to do nothing whilst inflation continues' to mount, unemployment continues to soar to even more unprecedented records than previously and the whole of the corporate sector is subject to complete stagnation. If the estimates for receipts are faulty those for expenditure are completely out of line. It is clear that the Government has been deliberately holding down its expenditure during the supply period for political purposes. This has gone to the extent of refusals in some areas to pay bills, and I do not mention here the examples because that would provide some difficulties for the companies which are owed money at the present time. In other words, the Government has been reneging on its financial commitments.

There are many areas in the Budget figures where there are under estimates of the real costs. A clear example is the payment by Government departments of postal and telephone charges. The Budget estimates provide for an amount of $75m to cover these charges. But the Treasurer ought to be the first to understand that these estimates are based on charges as at June this year. This was pointed out in evidence to the Senate Estimates Committees. The recently announced increases- 50 per cent in telephone and 80 per cent in postal charges- have of course been effective as from 1 September. The additional expenditure of these items will be of major significance even if there is a substantial reduction in usage.

There are further areas of expenditure which demand attention. First of all is that associated with Medibank. On evidence available to the

Opposition it is clear that the estimated expenditure of $ 1,437m on Medibank will be substantially exceeded and I challenge the Treasurer to deny that. Medibank claims are running at a rate well in excess of that predicted. The original staff estimates have been more than doubled and additional personnel are being employed to meet current demands. Even a brief examination of the Canadian health care system would demonstrate the total absurdity of the Medibank estimates.

Another major area of concern is related to unemployment and sickness benefits. Expenditure under this head is based on an increase of approximately 25 per cent to 30 per cent in average unemployment for 1975-76 compared with 1974-75. Yet trends in unemployment- confirmed by the Minister for Labor and Immigration (Senator James McClelland)- indicate that average unemployment will be around 40 per cent higher this year than during 1974-75. If this is the case the Government will be committed to an additional expenditure over and above the Budget estimates.

Similar comments can be made in respect of education spending. The education estimates presented in the Budget statements contain an allowance for adjustment for cost escalation in education grants of $20m. This allowance- not included in a specific appropriation- would permit additional cost increases to around 6 per cent only. If cost increases occur at a more realistic rate there will of course be a requirement for greater funds to be spent on education.

The Opposition has already pointed out the way in which the present Government has used the Treasurer's Advance as a means of providing for additional expenditure. There is every indication that, by using the Treasurer's Advance, the Government will add to its aggregate spending estimates. There is no doubt that the Budget estimates are wildly inaccurate. This is not just the view which prevails on this side of the House. The Australian editorial of 13 October had this to say: . . . The Budget deficit is going to be much higher than Mr Hayden implied last week. It is going to be somewhere near the alarming figure of $4,000m. Such a deficit will be highly inflationary. It is a figure from a fantasy world. Australia has never had a deficit of this level in its history. Even in the good old days- and they were but a few years ago- there were rarely any deficits in our Budgets. Anything in the area of $2,000m was looked upon with the gravest anxiety . . .the Prime Minister and Mr Hayden cannot possibly maintain that a still higher budget deficit will be acceptable.

The implications of the deficit which we now face are extremely serious. If the Government adheres to its stated monetary target of 20 per cent growth in M3 during 1975-76 there will be a dramatic squeeze on the availability of private sector finance and a consequent increase in interest rates. This could have a catastrophic effect on private enterprise. It is completely inconsistent with any attempt to revive the private sector or to restore employment opportunities. The only other option available to the Government is of course to abandon its monetary target and once again to fuel the fires of inflation. In other words, that option is the option of printing money. I again challenge the Treasurer to deny the inaccuracy of this year's Budget figures. The fact is that this is simply pan of the fabric of dishonesty and deceit which now surrounds the present Government. Deception and duplicity have been principal weapons of the Whitlam political machine. This Government has become increasingly enveloped by scandal and the suspicion of corruption. Who, in fact, can believe a Prime Minister who said in 1972: 'Labor's first priority will be to restore genuine full employment without qualification and without hedging'? Who in fact can believe a Prime Minister who said in May of 1974: 'In Australia alone there is no unemployment; in Australia alone unemployment and inflation do not march side by side'? Who can believe a Prime Minister who claims a major tax reform when income tax is to rise by 34 per cent in a single year? Who can believe a Prime Minsiter who tells Australia's middle-income earners that they will be better off under the new tax system when they will be paying more tax than ever before? The single taxpayer on an average income will pay tax of $3,410 this year compared with $2,300 last year. This taxpayer's average tax rate will be 28 per cent this year compared with 23 per cent last year. The married taxpayer, with children, earning an average income will also pay substantially more tax. To claim otherwise is of course to be grossly irresponsible.

This Government cannot expect the public or the Parliament to have faith in this year's Budget. It is clear that members of the Whitlam Ministry have been prepared to tell untruths to this House consistently on financial matters. Two Ministers have been dismissed, but the facts indict the total group and in particular they indict the Leader of that group, the present Prime Minister. This Budget is discredited. It is an inaccurate document. It is a phoney document. There is no basis to be found in that document for the economic recovery which Australia so desperately requires. The simple fact is that a deficit approaching $4 billion will lead to the breakdown of the Australian economy. Both the Prime Minister and the Treasurer are very much aware of this fact. But regrettably for the national interest it is inconceivable that they are not now prepared to take corrective action. The Government stands condemned.

Suggest corrections